The Development Bottleneck and Outlet of PVC Industry in China

Since 2000, China's PVC industry has risen rapidly. China has become the world's largest producer of PVC. On May 25th, 2009, PVC futures contracts were listed and traded at the major stock exchanges. In the past year since its listing, PVC Futures has played a positive role in price discovery and hedging functions. It has played a positive role in improving the construction of the petrochemical market system, promoting the transformation of business concepts and business models, enhancing the brand value of the industry, and forming the price of PVC in China.

From the perspective of the development of China's PVC industry, since China became the world's largest PVC producer in 2003, the industry has entered a very fast growth period and has been maintained until now.

The data shows that the trend of rapid expansion of PVC in China in the next few years is still strong.

It is worth paying close attention that the data provided by China Chlor-Alkali Industry Association shows that in 2010-2012, more than 1 million tons of new production capacity will be planned every year. In 2009, the average annual operating rate of PVC is only about 50%. When the monthly operating rate is good, it is 60%-70%. When it is poor, it is still less than 50%. "If there are so many new production capacity, there will be a series of serious problems for the development of this industry." Li Jun, Chairman of China Chlor-Alkali Industry Association and Chairman of Shanghai Chlor-Alkali Chemical Co., Ltd., said that he has experienced international finance. With the impact of the crisis, the profitability of the entire industry fell from 10 billion yuan to 2 billion yuan in 2009, almost returning to the 2003 level. This shows that in the high-speed development of the PVC industry, the industry's resistance to risks and profitability are not stable.

Low industrial concentration

The data shows that last year, the output of PVC manufacturers was 4.43 million tons, and there were about 106 manufacturing enterprises in the entire industry, and the total output was 9.15 million tons. The output of the top 10 production enterprises only accounted for less than 50% of the level. It shows that the current concentration of PVC industry is still relatively low.

High energy consumption is another issue facing the PVC industry. The power consumption of polyvinyl chloride produced by the acetylene process in China is very high. In 2009, the country introduced a differential electricity price policy, which rose by 2.8 cents per kilowatt-hour. Based on this rise, the domestic PVC industry’s incremental cost is about 2.4 billion yuan. Li Jun predicts that the gradual adjustment of electricity prices will exert pressure on the development of the PVC industry, especially the calcium carbide production enterprises in the northwest region.

In addition, the unreasonable industrial layout also restricts the development of PVC. It is understood that in 2009, 82% of the domestic production of calcium carbide and 32% of PVC were produced in the western regions of Gansu, plus the central region. Almost all the calcium carbide and half of the acetylene PVC production were in the Midwest. In the region, but in the central and western regions, PVC consumption accounts for less than 30% of total production. On the contrary, the consumption of PVC is mainly concentrated in eastern coastal areas such as East China and South China, and there are certain problems in the industrial layout of the PVC industry.

Structural adjustment becomes an inevitable choice

In view of the low concentration of PVC industry and the unreasonable industrial layout, Li Jun said that developed countries have many good experiences that are worth learning from. Li Jun believes that the PVC industry itself can be integrated, and different companies and different regions can effectively share and redistribute resources. In recent years, the pace of PVC consolidation has accelerated significantly. With the acceleration of integration and the effective use of industry resources, the sustainable development capacity of the PVC industry has gradually increased.

In addition, increase investment in science and technology to promote industrial upgrading; adhere to clean production, adhere to the development of low-carbon economy; strengthen the industry's self-discipline constraints and technological progress is also an effective way to solve the current development of the PVC industry. Li Jun said that domestic PVC enterprises can no longer expand by 2 million tons and 3 million tons each year. Now they do not need the value-added of the industry, no shortage of plans and plans, and what is missing now is supervision, assessment, technological progress and technological innovation.

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